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Watsco (WSO) Q4 Earnings Top, Up Y/Y on Solid HVAC/R Demand
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Watsco, Inc. (WSO - Free Report) reported impressive results for fourth-quarter 2021, wherein earnings and sales topped their respective Zacks Consensus Estimate. Also, both the top and bottom lines grew strongly on a year-over-year basis. The upside was backed by solid demand for HVAC/R products and pricing despite seasonality. Also, operating efficiencies and strategic acquisitions added to the positives.
This largest distributor of HVAC/R hiked its annual dividend by 13% to $8.80 per outstanding share of its Common and Class B common stock, effective April 2022.
Inside the Numbers
Watsco reported quarterly earnings of $2.02 per share, which topped the consensus estimate of $1.71 by 18.1% and increased a whopping 77.2% year over year on record quarterly sales.
Total sales of $1.51 billion surpassed the consensus mark of $1.35 million by 11.8% and increased 31% from the year-ago period. Sales rose 21% on a same-store basis. The upside was primarily driven by investments in customer-focused technologies and the expansion of the company’s branch network. Also, continued investment in technologies designed to revolutionize customer experience added to the positives.
Sales of HVAC equipment (heating, ventilating and air conditioning; comprising 68% of sales) were up 22% year over year. Sales of other HVAC products (28% of sales) also increased 17% from the prior-year quarter. Sales from commercial refrigeration products (4% of sales) rose 35% year over year.
Operating Highlights
Gross margin expanded 290 basis points (bps) for the quarter to a record level of 27.3%. SG&A expenses increased 36% year over year.
Operating margin expanded 210 bps year over year to a record level of 8.1%.
Financial Operations
As of Dec 31, 2021, cash and cash equivalents were $118.3 million compared with $146.1 million at 2020-end. Cash from operations came in at $349.6 million for 2021 compared with $534.4 million a year ago.
2021 Highlights
Net sales totaled $6.28 billion compared with $5.05 billion in 2020, reflecting an 18% increase on a same-store basis. Earnings per share grew 54% year over year to $10.78. Sales of HVAC equipment, other HVAC products, and commercial refrigeration products were up 18%, 17%, and 29% year over year, respectively.
Gross margin expanded 240 bps for 2021 to a record level of 26.6%. SG&A expenses increased 27% year over year.
Operating margin expanded 210 bps year over year to a record level of 10%.
D.R. Horton’s quarterly earnings and revenues beat the respective Zacks Consensus Estimate and improved on a year-over-year basis. The upside reflects a robust housing market, significant market share gains, a vast geographic footprint and varied product offerings across multiple brands.
Both earnings and revenues for PulteGroup topped the Zacks Consensus Estimate and improved 64.1% and 36.5% year over year, respectively, on the back of a solid housing market backdrop and resilient economy.
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Watsco (WSO) Q4 Earnings Top, Up Y/Y on Solid HVAC/R Demand
Watsco, Inc. (WSO - Free Report) reported impressive results for fourth-quarter 2021, wherein earnings and sales topped their respective Zacks Consensus Estimate. Also, both the top and bottom lines grew strongly on a year-over-year basis. The upside was backed by solid demand for HVAC/R products and pricing despite seasonality. Also, operating efficiencies and strategic acquisitions added to the positives.
This largest distributor of HVAC/R hiked its annual dividend by 13% to $8.80 per outstanding share of its Common and Class B common stock, effective April 2022.
Inside the Numbers
Watsco reported quarterly earnings of $2.02 per share, which topped the consensus estimate of $1.71 by 18.1% and increased a whopping 77.2% year over year on record quarterly sales.
Watsco, Inc. Price, Consensus and EPS Surprise
Watsco, Inc. price-consensus-eps-surprise-chart | Watsco, Inc. Quote
Total sales of $1.51 billion surpassed the consensus mark of $1.35 million by 11.8% and increased 31% from the year-ago period. Sales rose 21% on a same-store basis. The upside was primarily driven by investments in customer-focused technologies and the expansion of the company’s branch network. Also, continued investment in technologies designed to revolutionize customer experience added to the positives.
Sales of HVAC equipment (heating, ventilating and air conditioning; comprising 68% of sales) were up 22% year over year. Sales of other HVAC products (28% of sales) also increased 17% from the prior-year quarter. Sales from commercial refrigeration products (4% of sales) rose 35% year over year.
Operating Highlights
Gross margin expanded 290 basis points (bps) for the quarter to a record level of 27.3%. SG&A expenses increased 36% year over year.
Operating margin expanded 210 bps year over year to a record level of 8.1%.
Financial Operations
As of Dec 31, 2021, cash and cash equivalents were $118.3 million compared with $146.1 million at 2020-end. Cash from operations came in at $349.6 million for 2021 compared with $534.4 million a year ago.
2021 Highlights
Net sales totaled $6.28 billion compared with $5.05 billion in 2020, reflecting an 18% increase on a same-store basis. Earnings per share grew 54% year over year to $10.78. Sales of HVAC equipment, other HVAC products, and commercial refrigeration products were up 18%, 17%, and 29% year over year, respectively.
Gross margin expanded 240 bps for 2021 to a record level of 26.6%. SG&A expenses increased 27% year over year.
Operating margin expanded 210 bps year over year to a record level of 10%.
Zacks Rank
Currently, Watsco carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some Recent Construction Releases
D.R. Horton, Inc. (DHI - Free Report) reported impressive results for first-quarter fiscal 2022.
D.R. Horton’s quarterly earnings and revenues beat the respective Zacks Consensus Estimate and improved on a year-over-year basis. The upside reflects a robust housing market, significant market share gains, a vast geographic footprint and varied product offerings across multiple brands.
PulteGroup Inc. (PHM - Free Report) reported better-than-expected results for fourth-quarter 2021.
Both earnings and revenues for PulteGroup topped the Zacks Consensus Estimate and improved 64.1% and 36.5% year over year, respectively, on the back of a solid housing market backdrop and resilient economy.
M.D.C. Holdings, Inc. reported tepid results for fourth-quarter 2021.
Both the top and bottom lines missed the respective Zacks Consensus Estimate. MDC provided a tepid guidance for first-quarter 2022 deliveries.